In Tiguino, a Huaorani Indian settlement on the Cononaco river deep in the Ecuadorian Amazon, two ladino workers lean on the fence of an oil well, cigarettes dangling, faces set hard like belligerent squatters.

Babae Ima, the leader of Tiguino's Huaorani clan, lumbers up. Ima has forsaken the gumi (a belt worn around the waist and penis), for army fatigues, fluorescent shorts and wellington boots, all provided by the oil company. It is only by his say-so that these oil workers are allowed here, but the oil firms have worked hard to nurture this relationship.

Tiguino squats at the end of a 115km oil road that carries a giant pipeline into the jungle, marking the only access from the outside world to the Cononaco, which flows deep into the Amazon and is populated by a number of tribes. No one passes down the river without Babae Ima's permission - and remuneration.

In Tiguino, thatched huts have given way to concrete boxes with corrugated roofs; more gifts from the petroleros. The town is littered with rubbish and rum bottles.

Babae Ima cuts a somewhat ridiculous figure, but his reputation as a ruthless warrior is secure. He's in bellicose mood after the flight of his 13-year-old second wife, a gift from the Shuar tribe, despite the Shuars' plans to replace the girl with her sister. But this isn't his only conflict.

He shakes open a sack around which flies have settled, and out rolls a decomposed human head. He explains that this is a trophy from the massacre two years ago of the Tagaeri tribe. Ima's men claim the massacre was a revenge attack for the spearing of his son in 1993 in a tribal dispute. Huaorani tribesmen must avenge deaths, and justice may be swift or delayed for years.

Yet witnesses and investigators believe the massacre was a mercenary act on behalf of relative newcomers - illegal Colombian loggers. The Tagaeri, who violently fend off attempts at contact, inhabit an area where commercial logging is outlawed. Yet the zone, rich in cedar and mahogany, is attracting loggers from across the Colombian border, who strike deals with pliable indigenous leaders.

President Luis Inacio "Lula" da Silva of Brazil was heavily criticised recently for failing to protect his country's forests, after figures showed a 6 per cent increase in the rate of deforestation last year. As a result, Survival International, an Indian-rights group, warned that tribes in the Mato Grasso state, where Brazilian deforestation is greatest, were facing genocide by loggers.

But the story is already familiar in neighbouring Ecuador, which has the highest deforestation rates in South America, yet receives little publicity. In Ecuador, the genocide of tribes is already under way.

The Tagaeri are one of the most vulnerable tribes in Ecuador. Extraordinarily secretive, they have near-mythical status. They are thought to number only about 100.

What's made them a focus for attention is the fact that they inhabit a 1.7-million acre reserve called the Zona Intangible (untouchable zone), marked out in 1999 to protect the Tagaeri. It lies within the Yasuni National Park, a Unesco reserve where commercial logging is prohibited. Its precious cedar and hardwood bounty, however, is proving irresistible to illegal loggers.

Before the loggers, the last white people to contact the Tagaeri were two missionaries dropped in by an oil company helicopter in 1987. Bearing a Bible and the company's plans to move into the area, they offered the Tagaeri wealth - and salvation - in return for co-operation. When the helicopter returned, the bishop and nun were pinned to the floor, stuck through with spears. The oil company decided to try somewhere more hospitable.

Such is the Tagaeri's reputation for ferocity that when investigators went to the scene of the 2003 massacre, armed troops in flak jackets set up a perimeter guard. Yet, despite grainy images from the police video taken that day, which show spears protruding from a number of blackened corpses, the exact details of the massacre remain hazy.

Franziska Müller, the co-owner of Bataburo Lodge, the only tourist lodge that was permitted by Babae Ima, is the closest thing to an outside witness. Returning from the massacre, the killing party docked at her pontoon. "The Huaorani were all excited," she says. "They said they'd just killed 26 Tagaeri, and when I didn't believe them, they pulled the head out of a bag and showed me."

The Huaorani claimed they had tracked the Tagaeri to a clearing, and finding the men out hunting, set about shooting and spearing the women and children in the camp. An injured man was lying in a hammock - it was him they beheaded. Reports say that as the children fled into the huts, the killers set fire to them.

The Huaorani then warned Müller to evacuate her 20 eco-students as she could be caught up in a revenge attack by the Tagaeri. The following night, the guests having fled, Müller abandoned the lodge as a mysterious fire engulfed the wooden huts.

The killers say the massacre was a tribal revenge attack, and so - because Ecuador's constitution allows tribes to resolve conflicts according to tradition - outside the rule of law.

Others are not so sure. Detective Marco Vargas flew to the murder scene and visited Tiguino to interview those involved. He says there are strong indications of outside influence. "Revenge might have been one reason for the massacre, but I'm absolutely sure it wasn't the only one," he says. "The business ties between the loggers and the Tiguino community are very strong. The only people who really represented an obstacle to the loggers are now dead."

He's not alone in his suspicions. Penti Baihua is a Huaorani leader from Bameno, a settlement close to the massacre site. Baihua, who spoke to the killers, is adamant that the massacre was ordered by loggers.

In the smoky gloom of his thatched hut, he explains that, a few days before the killings, Colombian loggers had come within a few hundred yards of the Tagaeri settlement. "The loggers left, scared of the Tagaeri, and went to Tiguino. They said, 'We'll give you gasoline and ammunition, but go kill the Tagaeri. We want to work freely in that area. These foreigners, Colombian loggers, are going into Tagaeri territory like they own the land. They have rifles and come to kill and threaten. They don't respect the protected zone. For this, they killed our Tagaeri brothers."

Baihua is concerned by the impact of oil, tourism and logging on the tribes provoking tragedies like the massacre. And he is angered by the eroding effect encroaching "civilisation" has on Huaorani culture.

Life in Bameno contrasts sharply with that in Tiguino. In Bameno, the older generation still wear gumis. Dinner arrives as two naked Huaorani hunters step ashore from their canoe, carrying 6ft blowpipes. Baihua fears this culture will soon be lost to corrupting forces, through the willingness of Huaorani clans such as Babae Ima's to embrace consumer goods and the white man's way of life.

"They swapped traditional huts for cement houses when the oil companies came," he says. "Now, there's rubbish everywhere, they're drinking alcohol, they're losing their songs. I don't want my community to suffer the same fate. I want my children to know the jungle like the Tagaeri."

In Tiguino, Babae Ima and his clansmen embrace "civilisation" but reject other social restraints. After the massacre, a Huaorani council pardoned the killers and halted Vargas's inquiry. Witnesses say the Tiguino Indians have returned twice to wipe out the remaining Tagaeri, but have been unsuccessful. If they aren't prevented, a race of people will die.